US President Donald Trump has rejected Iran’s response to a US-backed peace proposal, escalating concerns that the 10-week conflict could drag on and further destabilize global energy markets.
“I don’t like it – TOTALLY UNACCEPTABLE,” Trump wrote on Truth Social on Sunday, dismissing Tehran’s counteroffer without elaboration.
The rejection triggered an immediate market reaction. According to Reuters, oil prices jumped by more than $4 per barrel on Monday, as fears grew that the strategically vital Strait of Hormuz would remain largely closed.
Before the war began on Feb. 28, the narrow waterway handled roughly one-fifth of global oil and liquefied natural gas (LNG) flows. Now, traffic has slowed to a trickle, with only a handful of tankers reported transiting the strait in recent days – some operating with tracking systems turned off to avoid potential attacks.
What did Iran demand in its proposal?
Iran’s proposal, released Sunday, focused on ending hostilities across multiple fronts, including Lebanon, where Israel continues to fight Iran-backed Hezbollah forces.
Tehran also demanded compensation for war damage, reaffirmed its sovereignty over the Strait of Hormuz, and called for the US to lift sanctions, end its naval blockade, guarantee no further strikes, and remove restrictions on Iranian oil exports.
The US proposal had envisioned a ceasefire first, followed by negotiations on more contentious issues such as Iran’s nuclear program. Trump’s swift rejection now leaves diplomatic efforts in limbo.
How is the Strait of Hormuz crisis affecting shipping and security?
The standoff has turned the Strait of Hormuz into one of the war’s main pressure points, with the waterway repeatedly closing and reopening as the conflict swung between active fighting and intermittent ceasefires.
Recent incidents include the United Arab Emirates (UAE) intercepting drones launched from Iran, Qatar condemning an attack on a cargo vessel in its waters, and Kuwait engaging hostile drones in its airspace.
Meanwhile, clashes continue in southern Lebanon despite a US-brokered ceasefire announced on April 16.
Israeli Prime Minister Benjamin Netanyahu said the war is far from over, stressing the need to eliminate Iran’s enriched uranium stockpile, dismantle nuclear facilities, and counter Tehran’s missile capabilities and regional proxies.
The conflict is also weighing on US domestic politics. Rising gasoline prices have made the war increasingly unpopular among US voters ahead of upcoming congressional elections, according to Reuters.
Washington has struggled to rally international support. NATO allies have declined US calls to deploy naval forces to secure the Strait of Hormuz without a broader peace agreement and international mandate.
Is there an off-ramp from the Iran war?
Trump is expected to travel to China from May 13 to 15, where the conflict with Iran will be a key topic in talks with President Xi Jinping.
China’s foreign ministry has officially confirmed the three-day visit on the morning of May 11. Earlier, the White House said the opening ceremony and key negotiations would take place on Thursday, with the visit concluding on Friday.
Trump’s visit comes just days after Iran’s top diplomat traveled to Beijing for talks with Chinese Foreign Minister Wang Yi. While there is no evidence of official Chinese backing for Tehran, reports say private Chinese firms have used artificial intelligence (AI) and open-source data to help monitor US carrier groups and airbases.
Trump has previously threatened “big problems“ for Beijing if it supplies weapons to Iran.
The US is urging Beijing to use its influence over Tehran to push for a deal, though it remains unclear whether diplomatic efforts can regain momentum.